The US Will Spend Between $3 And $7 Per Gallon Of Gasoline “Saved” By Consumers Driving Electric Vehicles

Sometimes you just have to laugh – for fear of the hysterical crying fit that would ensue from recognizing our shameful pathological reality. To wit: Reuters[2] is reporting on a CBO study that shows the US electric car policy will cost $7.5bn by 2019. The report finds that the government’s policy will have ‘little to no impact’ on overall gasoline consumption. 25% of the cost of the program is going up in Fisker Karma-inspired smoke[3] as part of the $7,500 per vehicle tax credit and the rest of the cost is in grants to such well-deserved and successful operations asGM’s Chevy Volt[4] – which will backfire since the more electric vehicles the automakers sell (thanks to government subsidy) the more ‘higher-margin’ low-fuel-economy guzzlers it can sell and still meet CAFE standards (re-read that – amazing!) In 2012, 13,497 Chevy Volts and 4.228 Nissan Leafs have been sold (all that pent-up demand) as the CBO notes that despite the $7,500 subsidy, the cost-differential to conventional cars remains too wide – inferring a $12,000 tax credit would be more comparable.

U.S. government standards mandate that by 2025, automakers to show corporate average fuel economy (CAFE) of 54.5 miles per gallon or about 39 miles per gallon in real world driving.

… The federal tax credits apply to the first 200,000 electric vehicles sold by each manufacturer. But these sales will leave room for automakers to continue to sell models with low fuel economy, the CBO said.

“The more electric and other high-fuel-economy vehicles that are sold because of the tax credits, the more low-fuel-economy vehicles that automakers can sell and still meet the standards,” according to the report.

…

While drivers of these electric vehicles use less gasoline and emit less greenhouse gas such as carbon dioxide, the cost to the government can be high, the CBO found. The U.S. government will spend anywhere from $3 to $7 for each gallon of gasoline saved by consumers driving electric vehicles.

…

The costs of electric vehicles — fully electric and plug-in hybrid electric — are much higher than similar-sized gasoline vehicles, and the federal tax credit of $7,500 per vehicle is not enough to bridge the gap, the CBO said.

The CBO said an average plug-in hybrid vehicle with a battery capacity of 16 kilowatt-hours is eligible for the maximum tax credit of $7,500.

“However, that vehicle would require a tax credit of more than $12,000 to have roughly the same lifetime costs as a comparable conventional or traditional hybrid vehicle,” the CBO said.